18 December 2009
Preparing for a Yearly Workers’ Comp Audit
Posted by articleranks under: Money .
Your business’ actual work comp insurance premium is calculated from the yearly work comp audit conducted by the insurance company. This insurance premium can vary drastically from the estimated insurance premium used for your original policy.
To expedite the process, assign one person as the sole contact for the auditor. This can eliminate miscommunication. Choose a person that is closely familiar with all departments and employees, as well as your payroll information.
Have info about the particular job duties performed by a certain department or by individual employees available.
Try to expect all questions to gain an advantage and ensure that you can provide correct details to your auditor. You don’t want the auditor to make any guesses because he will inevitably select the work comp codes that will likely be more favorable to the work comp insurance company.
Request the records for the previous year’s audit for your contact person to look over with your previous years audit billing statements. This can jog his or her memory from the previous audit or show her the kinds of information the auditor is hunting for). Either way, it is a great preparation tool, kind of like studying for a test.
Make sure that your payroll information obviously stipulate which hours were paid as overtime so that he doesn’t mistake that pay with straight hourly wages. If your company uses subcontractors or independent contractors, make sure you have explanation that they have their own work comp insurance. Without that proof, your premiums will likely go up, as you may be liable for their risk exposure.
If you use a staffing agency, those workers are employed by that agency and usually will be covered by the agency’s work comp policy. Make sure your records and clearly differentiate between workers, contracted temp workers, and independent contractors.
If you are in the construction industry, or similar, remember that you’ll use multiple work comp job codes and allot one worker multiple codes. Paperwork must show the actual hours staff spent in each one of the different workplace exposures. If not, every worker will be put into the highest classification code possible.
The key is understanding how the insurance carriers operate. Their ultimate goal is to charge you as much as possible with out losing your business. The thing you need to understand is that the insurance carriers frequently make mistakes and you have to be on the look out for those errors.
If you’re not completely prepared or you’re not familar with the work comp system, talk to a specialist or start reading up on your work comp knowledge. It will likely mean the difference between saving and spending a lot of money.
It is a lot to remember. You should think about hiring a private auditing company to help prepare for your yearly work comp audit.